FTC sues savings app Beam Financial on behalf of customers

Federal Trade Commission Building in Washington DC

Ashley Stringer | Cnbc

The Federal Trade Commission has filed a civil complaint, alleging “improper or deceptive acts” by Beam Financial, a San Francisco start-up behind a savings app to offer above-market interest rates on federal insurance deposits Is for

As CNBC first reported in October, dozens of Beam customers complained that they had not reached their funds, in some cases for months.

In a complaint filed in federal court in San Francisco on Wednesday, Beam and its founder – 37-year-old Yinan “Aaron” Du – were accused of misleading their customers by claiming that they had “their money with” 24/7 Will have access to No lock-up. “Instead, the complaint states, customers who have tried to withdraw money are given a runrate.

According to the complaint, “Many consumers have complained that the defendants have only stolen their deposits.” “Some consumers have highlighted that they have experienced particularly severe hardship because defendants have not returned their money during an ongoing epidemic.”

The FTC said in a statement that Beam “misled users about access to its funds.”

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“Beam Financial promised convenient 24/7 access to savings, but then people had to wait weeks or months to get their money,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.

The complaint seeks unspecified relief for Beam’s customers, as well as preventing the company and DU from further violations.

The complaint also states that Beam has failed to deliver on its promise to pay higher interest rates, with base rates as high as 1%. In fact, the complaint states, new customers currently receive a rate closer to 0.04% than they would receive in a traditional bank account. The complaint also alleges that Beam would stop paying interest on funds that customers had requested to withdraw, but would not return their money for weeks or months.

A Beam spokesperson declined to respond to the substance of the FTC complaint, but told CNBC in an e-mail that the company was making progress with people getting their money back.

“We have processed 98% of the customer funds which were affected,” the statement said.

Separately, some customers who had previously complained about the withdrawal of unauthorized requests for months told CNBC that their withdrawals were partially completed on Wednesday.

San Diego marketing executive Steve Wolf, who attempted to withdraw his entire $ 15,000 account balance earlier this summer, said he received a $ 10,000 deposit in his bank account. There was no word about the remaining $ 5,000.

Josh Allen of Colorado said his bank reported him a pending deposit of more than $ 7,800 from Beam.

In its complaint, the FTC said that funds given to customers often have to be processed.

The complaint states, “In many instances, consumers have received their money only after disclosing to the defendants that they are reporting the problem to government regulators or law enforcement officials or, alternatively, they have initiated legal action Has suggested. “

In addition to the FTC complaint, Florida depositor Frederick Chang filed a proposed class action suit on Beam’s clients last week. The company claims to have around 187,000 customers, although a close to the firm says the actual accounts may be closer to 30,000.

Three of Beam’s vendors – Huntington National Bank, which has $ 2.4 million in custody in Beam deposits, and transaction processing firms Dwolla and Stable Custody Group – have sued Beam in an Ohio court, demanding that The company should provide them the necessary information to refund the customers funds.

A Beam spokesman said the company was “working with Dowla to resolve any outstanding requests.”

The company has not yet responded to any lawsuits in court.

(With additional reporting by Laurie Koneish, Don Giel, Scott Zamost and Jennifer Slessinger.)

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